How are shoppers embracing AI in retail?

Love it or hate it, the rise and impact of AI (Artificial Intelligence) in the modern world is unavoidable. And it’s not all negative. From recommending TV shows to suggesting who an unknown caller might be, AI is already benefiting our everyday lives.

These benefits even apply to the world of retail. The shopping industry has long embraced technology like machine learning, natural language processing, and other advanced algorithms to analyse data and automate or augment retail operations and experiences.

The importance of AI in retail lies in its ability to make data-driven decisions that can optimise operations, improve customer experiences, and drive sales. Here, we’ll look at some of the key ways shoppers are embracing AI in retail, and the benefits it reaps for consumers.

The benefits of AI in the retail industry

AI in retail can help brands operate more efficiently, reduce costs, and enhance customer experience. As a result, it is increasingly important for them to embrace AI to stay relevant in today’s retail landscape. These are some of the most innovative technologies that retailers are using right now.

Virtual Reality

Many retailers are using virtual reality (VR) technology to provide immersive and interactive shopping experiences for customers. By using VR headsets, customers can virtually try on clothes and accessories, view products in 3D, and even walk through virtual stores. Some retailers also use VR to train employees and visualise store layouts and designs.

Personalisation

AI-powered personalisation algorithms can analyse customer data like purchase history, browsing behaviour, and demographics. It then provides personalised recommendations and promotions tailored to each individual customer. This can include targeted email campaigns, personalised product recommendations, and customised landing pages on the retailer’s website. By providing a more personalised shopping experience, retailers increase customer loyalty and sales.

Augmented Reality

Retailers are using augmented reality (AR) technology to enhance the customer experience and help shoppers visualise products in their own environments. For example, an AR app can help customers see how furniture would look in their home before they buy. Or how a pair of glasses or a certain shade of lipstick would look on their face. Many tech retailers are also using AR for virtual product demonstrations and launches.

Chatbots

Chatbots can provide instant, AI-powered customer service and support, answering common questions and resolving issues in real-time. Chatbots use natural language processing and machine learning algorithms to understand customer inquiries, and provide accurate and helpful responses.

Retailers can integrate chatbots into their website or social media channels, so customers can access support whenever and wherever they need it. By providing efficient and convenient customer service, chatbots help retailers improve customer satisfaction and loyalty.

How retail outlets are using AI

Many physical retail stores are using AI to enhance customer experiences, optimise operations, and increase sales.

AI-powered facial recognition software, for example, identifies customers as they enter a store, and personalises their experience through targeted recommendations, promotions, and marketing messages.

And when it comes to checkout, AI can speed up the process by automatically identifying products and processing payments without the need for manual scanning or input.

For retail teams, AI can help optimise staff schedules based on traffic patterns, sales data, and other factors to ensure that the right number of staff are on hand at all times. It can also improve inventory management by tracking product levels in real-time, predicting demand, and identifying which products are selling well and which are not.

Many stores also now opt for AI-powered cameras that can monitor the store for potential theft and other security issues, and alert staff when necessary.

Retail brands using AI

An example of a retail store that has successfully embraced AI in its physical locations is Lululemon. “The Lululemon Mirror” has been launched in select stores, using computer vision and machine learning algorithms to provide personalised product recommendations and styling advice to customers.

Customers stand in front of the mirror and select their preferred workout activity, products styles, and colours. The mirror then suggests outfits that match these preferences, along with complementary products such as accessories and shoes. The mirror can also recommend sizing based on the customer’s body shape and measurements.

How online retailers are using AI

Where personalisation like “The Lululemon Mirror” is impressive and likely engages plenty of customers in physical stores, personalisation online is simply expected. And if you’re not using it, you’re likely to be left behind.

For online retailers, AI-powered algorithms can help tailor promotions, specific items, and even how their website looks depending on a customer’s previous behaviour.

Studies have shown that recommended products and other personalisation boosts sales and engagement. And can even lead customers who didn’t make a purchase to return to the site later.

Optimised search functions also help customers find products quickly and easily. In turn, these searches and their results can inform personalised recommendation engines that further improve the products promoted to each shopper.

The online shopping experience is further improved by chatbots that respond to customer queries in real-time. By understanding and answering common questions, they free up time for human customer service representatives to deal with more complex queries and requests.

And behind the scenes, online retailers can use AI to identify and prevent fraudulent transactions by analysing customer behaviour and transaction data.

Online retailers using AI

Amazon uses extensive AI to enhance the customer experience and optimise its operations. The “Recommended for You” feature uses AI algorithms to suggest products to customers based on their purchase and browsing history, and reviews and ratings.

AI is also used to optimise Amazon’s supply chain and logistics operations to fulfil orders more efficiently. Its use of AI has enabled the company to deliver a more personalised and efficient shopping experience for customers, while also optimising its operations and increasing sales. As a result, Amazon is a prime example of how AI can drive success in e-commerce.

How shoppers are responding to AI in retail

Studies have repeatedly shown that shoppers respond positively to AI in retail settings. A Salesforce survey found that 51% of consumers believe AI improves their shopping experience, and 62% said they are open to receiving recommendations from AI-powered personal shopping assistants.

59% were comfortable with retailers using their purchase history to personalise their shopping experiences. Another study by Capgemini found that 88% of shoppers report positive experiences with chatbots.

It’s clear that, slowly but surely, shoppers are embracing AI in retail settings. And they’re open to AI-powered tools that enhance their experience.

The future of AI in retail

As retailers continue to invest in AI and improve their offerings, consumer acceptance and adoption of AI will continue to grow. So the future of AI in retail is looking promising. But where can it go from here?

Some of the hottest predictions for the future of AI in retail include hyper-personalization, enhanced immersive in-store experiences like virtual try-ons and interactive product displays, and improved customer service with chatbots providing faster and more efficient customer support.

Behind the scenes, retailers will benefit from improved supply chain management that can predict demand, identify bottlenecks, and improve logistics processes. This can lead to faster and more efficient delivery times, reduced costs, and increased customer satisfaction.

Improved inventory management will also help with managing stock levels and reducing waste, leading to more efficient operations, cost savings, and increased profitability for retail brands that embrace AI.